Michael Della Penna

Is there any upside to CECL? At our recent Webinar, Lending: Myth Vs Reality, Executive Managing Director Scott Martorana explained how CECL (Current Expected Credit Losses) is negatively affecting reserve to loan ratio and spoke frankly about the "disaster" of the policy. Do you agree or disagree? Let us know! #WebinarWisdom Missed the webinar? No worries, subscribers get access to all recordings: https://lnkd.in/eigpBHr7

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"Clients don’t necessarily care how things work behind the scenes." – Daniel Son, U.S. Bank In a recent ABF Journal interview, Dan Son, SVP, Working Capital Finance at U.S. Bank and our Chairman, Mike Humphreys, explore how our partnership is delivering solutions that allow companies to extend payment terms without disrupting supplier relationships — a game-changer for businesses navigating today’s complex supply chain landscape. Curious about how we’re reshaping finance solutions? Read the full article here ➡️ https://lnkd.in/eYkmg627 SIMPLE, SCALABLE WORKING CAPITAL #SupplyChain #WorkingCapital

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Looking to elevate workflow efficiency? Shastic's AI-Workflow-Automation platform is what your credit union needs to revolutionize operational efficiency and member engagement. Why Choose Shastic? -Streamline Processes: Automate to save time and minimize errors to focus on high-value tasks. -Enhanced Member Experience: Deliver personalized, digital-first services that exceed member expectations. -Drive Efficiency and Growth: Leverage predictive analytics for data-driven decisions, enhancing your competitive edge. -Seamless Integration: Effortlessly connects to your existing systems in minutes with minimal IT lift. 🔍 Transformative Impact From loan processing to member services, witness a tangible improvement in productivity, satisfaction, and ROI. Join the leaders who are already redefining the credit union industry with Shastic. 🌐 Schedule Your Demo Today Don't just keep pace with technology—lead the charge. Request your Shastic demo today and take the first step toward a smarter, more responsive, and member-focused future. https://hubs.ly/Q02Py-7B0 #AI #workflowautomation #efficiency #automation #creditunion #banking #workflow

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Mortgage Applications Decreased 21.9% From Two Weeks Earlier, Purchase Applications Down 48% From Two Weeks Earlier https://lnkd.in/gMQnp4az Chuck Cowan Brad Moseley #mortgage

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Digital Federal Credit Union (DCU), the largest credit union in Massachusetts, has announced plans to merge with First Tech Federal Credit Union, the largest in Silicon Valley. This merger will create a combined entity valued at approximately $28.7 billion, serving nearly 2 million members across more than 50 branches in eight states. The deal has received unanimous approval from both organizations' boards and is expected to close in 2025, pending regulatory approvals from the National Credit Union Administration and First Tech's membership. Following the merger, DCU President and CEO Shruti Miyashiro will lead the new organization, which will operate under DCU's charter while retaining the First Tech brand. The merger aims to enhance member services by expanding digital banking capabilities and increasing philanthropic efforts, with plans to donate over $4 million annually to local communities. Members will see no immediate changes as both credit unions will continue to operate independently until their systems are fully integrated. My own thoughts are that this merger not only positions the new entity among the largest credit unions in the nation but also reinforces a commitment to innovation and community support, promising enhanced services for members and a stronger philanthropic impact. #creditunions #banking #bankingindustry https://lnkd.in/ekEY5sRt

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The U.S. Small Business Administration (SBA) has recognised that its previous working capital line product was ineffective for lenders. Now, the SBA is launching a new 3-year Working Capital Pilot (WCP) featuring a restructured line of credit for small businesses, offering greater flexibility than traditional term loans. The launch is set for later this year. #assetbasedlengin #assetbasedfinance #abl #smefinance #workingcapital #bcrnews

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New blog post: CECL implementation is creating new norms for banks and credit unions. Learn which model inputs your financial institution should be evaluating to ensure you're maintaining a proactive approach to CECL. Read today: https://lnkd.in/eSHWeF-t Thanks to Zach Englert for sharing! Empyrean Solutions

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👏 A great article in Commercial Broker from NACFB about how CDFI's are vital when it comes to business finance solutions for SME's in the UK.

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Merry Christmas and have a wonderful new year. ❤️❤️ Here is food for thought Fannie Mae’s five predictions for 2025 According to Fannie Mae’s 2025 forecast, the housing market will continue to face challenges from 2024, including affordability issues and high mortgage rates. The report outlines five key predictions that will shape the market, offering insight into home sales, price trends, and new construction in the coming year. 1.    Mortgage Rates: Rates will stay above 6%, with inflation and job market stability preventing significant rate cuts. 2.    Economic Growth: The economy and employment will decelerate modestly. Inflation will ease but remain above the Federal Reserve’s 2% target until 2026. 3.    Existing-Home Sales: Sales will improve slightly to 4.25 million but remain near 30-year lows due to affordability issues and the lock-in effect, where homeowners keep low-rate mortgages. 4.    New-Home Sales: Limited existing inventory and strong demand will keep new-home sales robust, with the South and Mountain West dominating new-home sales thanks to favorable land availability and zoning. 5.    Home Prices and Rent: Home price growth will slow to 3.6%, improving affordability. Multifamily rent growth will remain modest at 2%-2.5%, with construction activity tapering off.

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If your institution is facing any of the following, it may be time to consider a more effective securities lending solution:  Read More: https://lnkd.in/eYE8QF8y

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New FMS Webinar for August 13, 2 - 3 PM ET ❕❕ The financial institution landscape and operating environment have shifted dramatically over the prior 24 months given Fed and fiscal policy. For many, the environment still hinders optimal profitability, risk management goals and confident strategic direction. Join us for this timely session with expert Ryan Henley at Stifel Financial Corp. to gain a deeper understanding of peer activity and relevant strategies for your institution's balance sheet: https://bit.ly/3xyGV1U #FMS #FMSWebinars #education #CPE #financeindustry #profitability #BalanceSheets #RiskManagement

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It is critical to identify shifts in data and ensure that your credit decision-making processes remain robust and accurate. In this recent paper from Digital Matrix Systems, discover advanced strategies for monitoring changes in borrower data. Contact our team if you have questions or would like additional information.

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It should not be surprising to read that the #CFPB’s crackdown on “Junk Fees” has ignited a heated debate across all FIs. While they mean well and aim to protect consumers, their broad approach raises many concerns about how it will impact FIs and consumers. Having a better understanding of where the CFPB is coming from can help FIs better strategize their response to the ruling. When partnering with an #expert in the #overdraftprotection realm, FIs can gain guidance on navigating the complex world of #overdraftfees. Staying ahead of the ruling and being in front of the curve can help keep your FI consumer-centric and help you slowly move away from relying solely on overdraft fees for revenue. https://okt.to/cUqsnR

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It should not be surprising to read that the #CFPB’s crackdown on “Junk Fees” has ignited a heated debate across all FIs. While they mean well and aim to protect consumers, their broad approach raises many concerns about how it will impact FIs and consumers. Having a better understanding of where the CFPB is coming from can help FIs better strategize their response to the ruling. When partnering with an #expert in the #overdraftprotection realm, FIs can gain guidance on navigating the complex world of #overdraftfees. Staying ahead of the ruling and being in front of the curve can help keep your FI consumer-centric and help you slowly move away from relying solely on overdraft fees for revenue. https://okt.to/muMpxy

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It should not be surprising to read that the #CFPB’s crackdown on “Junk Fees” has ignited a heated debate across all FIs. While they mean well and aim to protect consumers, their broad approach raises many concerns about how it will impact FIs and consumers. Having a better understanding of where the CFPB is coming from can help FIs better strategize their response to the ruling. When partnering with an #expert in the #overdraftprotection realm, FIs can gain guidance on navigating the complex world of #overdraftfees. Staying ahead of the ruling and being in front of the curve can help keep your FI consumer-centric and help you slowly move away from relying solely on overdraft fees for revenue.

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Researchers at the Federal Reserve just published an interesting FEDS note, providing more granular insight into rising #auto lending delinquency rates. As the authors point out, auto loans account for about 25% of non-mortgage consumer credit, so understanding auto defaults is a good window into understanding overall consumer financial health. Takeaways that struck me: 1. Most of the deliquencies are from loans originated in 2022 or afterwards. (Even notwithstanding the fact that 64% of auto loans were originated in the last two years, loans originated in 22-23 have steeper delinquency rates than other vintages.) 2. The rise in deliquencies appears to be heavily driven by increasing loan sizes. Other research, including recent Consumer Financial Protection Bureau blogs, have highlighted the role of larger payments in the rising deliquencies. But the Fed authors now disintangle the components of the larger payment: they show it’s not higher interest rates, but instead higher loan amounts. Said another way, due to pandemic-era supply constraints and demand-side consumers being flush with stimulus cash “As car prices surged, car buyers sought larger loans.” 3. The not-so-great news is some of the loan size growth is due to auto lenders, IN THE AGGREGATE, loosening their underwriting standards. “The increase in loan amount likely reflects the interactions of both credit supply and demand factors: borrowers demanded larger loans amid the run-up in car prices from mid-2020 to mid-2023 and lenders, in aggregate, appeared to relax their credit standards to originate these loans.” 4. But, as James Mulholland smartly pointed out earlier today, the authors find that banks tightened their auto lending in 2022-23. (!!!) Instead, credit unions and non-bank finance rushed in with looser loans . . . leading consumers (and the broader economy) to the trendlines that we’re seeing today. Here’s the relevant quote, with footnotes omitted: “[T]he composition of lenders originating auto loans changed significantly during this period. Banks, which held about 35 percent of loans outstanding in the auto market in 2019, appeared to tighten standards and pull back from lending in 2022 and 2023. At the same time, credit unions and finance companies stepped in and filled this gap. In particular, independent finance companies experienced increases in originations and, as of the end of 2023, accounted for a greater share of originations. These companies are not affiliated with a car manufacturer and tend to focus on riskier segments of the population, as evidenced by both higher loan-to-value ratios and higher delinquencies. As a result, their loans tend to have higher delinquencies and their LTV ratios, on average, are currently about 40 percentage points higher than those of banks.” #Boom #perShaggyItwasntme #regulatoryperimetermuch? https://lnkd.in/eH3ENCKJ

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While regional and community banks' direct exposure to CRE loans has been a major concern, the prevailing wisdom has been that large banks and megabanks have a smaller proportion of total loans in the CRE sector. However, the latest call report data released yesterday as summarized in Jason Goldberg daily email (that shows a sharp rise in the noncurrent loan rate for Investor CRE loans for large bank portfolios with a more modest increase for community banks) and a new study by @Viral Acharya et al. (https://lnkd.in/d95XsKj7) that reveals the escalating indirect exposure of large banks to CRE through their lending to Real Estate Investment Trusts (REITs) may ignite some new concerns about CRE exposure for large and Mega banks. REITs, major players in the CRE market, have increasingly relied on large banks' credit lines to maintain liquidity. This dependence has surged since 2013, making these credit lines a potential conduit for transmitting CRE shocks back to the banking sector. The study calls for regulators to incorporate this indirect exposure into stress tests and for banks to reassess their risk management strategies related to REIT lending. The study's findings are particularly concerning given the recent crisis faced by Blackstone REIT, which was forced to draw heavily on its credit lines to meet investor redemptions. This event serves as a reminder of the systemic risk posed by the interconnectedness of banks and REITs. Interestingly, the Federal Advisory Council (FAC) composed of banking industry representatives has called for restricting bank lending to non-banks like REITs. This was discussed in my previous post (https://lnkd.in/dA37NnKE), This is ironic, as such lending has fueled the growth of private credit funds, now seen as potential competitors to banks. On the other hand- yesterday’s Quarterly Banking Profile (QBP) for 1Q24 from the FDIC showed that deterioration in past due and nonaccrual (PDNA) on non-owner occupied CRE loans was concentrated at the largest banks (over $250bn in assets), which reported a PDNA rate of 4.48%, well above their pre-pandemic average of 0.59%. The next tier of banks, those with between $10bn and $250bn in assets, is also showing some stress, with a PDNA rate of 1.47%, up 12bps and above its pre-pandemic rate of 0.66%. These figures are above the 0.69% for community banks with $1-$10bn in assets. It will be interesting to see how the latest #CCAR exams tackle this issue for large bank portfolios. #banking #CRE #REITs #riskmanagement #financialsystem #economicrisk #nonbanklending #banks #communitybanks Manasa Gopal Prof. Dr. Maximilian Jager Sascha Steffen

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